Instagram Gives Brands New Way to Sell in 'Collection' Ads

Instagram is offering brands a new shopping-enabled ad unit as it moves further into the e-commerce space.

On Tuesday, the photo- and video-sharing app, owned by Facebook, started testing ads that blend videos and product catalogs where consumers can complete purchases without leaving. Instagram calls them "collection" campaigns, and they were first tested on Facebook.

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"They bring together video and direct-response in a compelling way that leads to better results across the board," says Phillip Huynh, paid social director at 360i. "I would anticipate the same success on Instagram, just like every time something is ported over from Facebook."

Facebook typically uses its different properties as testing grounds before expanding ads and services across the platform, like it did with Canvas ads, the full-screen, multimedia ad units that began on Facebook and now also run on Instagram.

E-commerce is becoming a big opportunity on Instagram, and a competitive category in its rivalry with Snapchat. Both platforms offer features to brands that link to purchases outside the apps, and both are slowly bringing the power to purchase inside the apps.

Fashion and beauty brands Birchbox and Revolve are the first marketers to try "collection" ads on Instagram. There are 200 million people following fashion-related accounts on Instagram, according to an Instagram spokeswoman.

Instagram, meanwhile, is becoming an important driver for the future of Facebook's business. Last week, Facebook's earnings report showed that the number of people on the social network had declined in North America for the first time, and that people were even spending less time on the platform. Executives like Sheryl Sandberg focused on the potential for Instagram.

Facebook has more than 5 million advertisers, while Instagram has around than 2 million. There are 70 million businesses on Facebook and 25 million on Instagram.

Facebook wants to give more advertisers the ability to easily extend campaigns from one platform to the next, and drive more of the advertisers to all its properties.

"Instagram is a business's visual shop on mobile, and we're seeing more people seek out businesses there," said Sheryl Sandberg, Facebook's chief operating officer, during the earnings call with analysts last week. "About two-thirds of the visits to Instagram business profiles are from people who don't yet follow them. This is how many businesses are finding new customers."